Closed the Circuit on JBL, Sold Puts on Oracle
By Dr. Paul Price of Market Shadows
Jabil Circuits (JBL) rallied enough since last December for us to close our Jan. 2015, $15 puts for just 25-cents per share. With so little left to gain by waiting another seven months, buying to close is exactly what we did today (June 20).
In the Market Shadows Virtual Put Writing Portfolio, we had sold 5 contracts of the JBL puts for $1.90 per share, collecting $950. Our net cost to close was just $125 leaving an $850 profit while ending our option obligation to potentially buy JBL shares.
We made 86.8% of the maximum potential gain in less than half the time we originally committed to. The results of this trade are reflected on our closed-out transaction list. We are now ahead by a cumulative $21,730 on all our fully completed option trades (sold puts that expired or that we bought back).
One of the profitable closed-out put sales had been a trade in data base software company Oracle (ORCL). Its shares took a tumble today after the company came up a few cents short on its after-the-close fiscal Q4 report yesterday.
We used weakness to sell 3 more ORCL Jan. 2016, $35 puts for $2.52 per share. We also added 4 new, somewhat more aggressive Jan. 2016, $40 puts @ $4.65 per share.
As always, with put sales, the maximum profit would be 100% of all premiums collected. Our worst case scenario would be having to buy 300 ORCL at $32.48 (with the $35 strike) and 400 shares at a net price of $35.35 if the $40 puts are eventually exercised.
Both new ORCL transactions are now reflected on our virtual put selling portfolio’s open positions list.
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Our option mix has two June positions set to expire today before 4 PM.
If nothing upsets the apple cart, we’ll be booking gains on 6 contracts of the Aegion (AEGN) Jun. $20 puts as well as 1 contract of the HollyFrontier (HFC) Jun. $38.50 put. Both look like they will simply expire worthless at today’s close. For option sellers that represents the best-case scenario.
We will only add those results officially once we are sure no actions are necessary.
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